Expert: Sanjiv Desai Date: 6/3/2008 Subject: Salary & Benefits in India
Question Hello
I'm currently looking into opening a branch office in Mumbai and am curious
about salaries & benefits for India employees. From what I find it appears that
for example a salary for a entry level finance worker such as accounts
payable is around $14,000 USD, but I understand that there are no cash
benefits expected which can amount to 60% of the cash salary. Is this so? If
you can help me understand the benefits issue I will be very grateful.
Regards,
Richard
Answer Dear Richard,
Thank you for your question.
I'm not sure exactly what kind or size of organization you are with, so my thoughts would have to be tempered with that in mind!
Also, when you say entry level finance worker, I assume that you are talking about a qualified Chartered Accountant. I also did not understand the line "...but I understand that there are no cash
benefits expected which can amount to 60% of the cash salary."
However, from what I understand, I could start by giving you an idea of typical salary structures at that level.
The monthly salary structure in India usually comprises of the following components:
1. Basic
2. House rent allowance
3. Other allowances as per Income Tax rules
4. Conveyance
From this either anywhere from 10 - 12 % of the basic is deducted and deposited into a savings fund usually called the provident fund or family pension fund.
Then, additional items are calculated on an annual basis such as:
5. Medical reimbursement
6. Leave travel assistance
7. Insurance cover
8. Provident fund (an amount equal to that deducted from the employee is deposited by the employer on a periodic basis)
Finally, to make the whole structure a little tax friendly, many companies offer expense reimbursements for a variety of things like petrol, telephone bills, sometimes car installments (in case the company has a car scheme for its employees) entertainment etc etc. These are expensed by the company and therefore not taken into account when calculating the employees taxable income. However, these could never amount to 60% of the compensation.
For an entry level Chartered Accountant, your estimate of US$14,000 is about right for the total compensation including all the above. Over and above this would only be an annual performance linked bonus.
I hope this has given you some clarity. In case you need any further or finer refinements in the advice, you could write back any time.
